V.I. Public Finance Authority Sale of $458 Million of Matching Fund Bonds Receives Strong Support on Wall Street

Before departing Washington D.C. this morning, Gov. John P. de Jongh, Jr. said the Virgin Islands Public Finance Authority on Thursday sold $458 million of Matching Fund Bonds. “The bond issue raised $86 million for the package of capital projects approved in August. The bonds will provide funding in the amount of $20 million of road improvement projects, $12 million for school improvements, $9 million for emergency management, $5 million for economic development investments, plus a wide range of other projects,” de Jongh said, adding that in addition to the funding for capital projects, bonds were issued to refinance higher interest rate bonds issued in 1998, and allowed the government to realize $30 million in interest cost savings.

The bonds were sold at an all-in cost of 4.51% for the 30-year bond issue, the lowest interest cost ever achieved on a long-term financing by the Virgin Islands government. “Investors eagerly put in orders for the bonds, and over $2.3 billion of orders were received for the $458 million sold,” de Jongh said. 

“This was a bond riot,” remarked Guy Logan, the Citigroup banker that led the financing team. “Institutional and retail investors vote with their money, and today, the investment community demonstrated its full support for the Virgin Islands program to build its rum industry.”

The bonds were rated in the triple-B rating category by all three of the national rating agencies, the first time that all three rating agencies have rated the Government’s Matching Fund Bonds. These ratings mean that the Government can count on a positive market reception when it needs to raise capital for infrastructure purposes.

de Jongh said he was gratified by the strong support shown by the investment community. “We came to market with these bonds at a time of considerable stress on our budget, and the budgets of all states across the country. We were delighted that the institutional investment community was able to recognize our efforts to invest in our rum industry, and put their money alongside ours, as together we are building a stronger future for the Territory.”

The investment banking team was led by Citigroup Global Markets, and included J.P. Morgan, Jeffries & Co., and Rice Financial Products.

Julito Francis, who as Director of the Public Finance Authority managed the financing effort, noted that the results exceeded all of the metrics that were set when the banking and legal team was assembled. “We raised capital for our new money projects at historically low rates, and we refunded our older bonds at today’s lower rates. Everyone pulled together on this. We were able to hit the market at a great moment, and we achieved all of the goals that we set.” 

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